Salter: Highway funding kicked down road, but not far

STARKVILLE — The decision earlier this year by Congress to kick the shiny can of federal highway finance down the crumbling road of America's deteriorating highways leaving state legislatures still scrambling to identify some stability in highway finance.

That's particularly true in states like Mississippi. From 2007 to 2011, the federal government provided $1.27 for road improvements in Mississippi for every one dollar paid in federal motor fuel fees and during the same period, federal revenues accounted for 51 percent of state spending on Mississippi's roads, highways and bridges.

After a long political standoff between the Senate and House, Congress last month finally passed legislation stabilizing the Federal Highway Trust Fund until May 31, 2015.

In the short-term, the congressional action will stabilize federal highway finance and prevent a rationing of federal highway funds for approved projects already in the construction pipeline. The temporary cash infusion is sufficient to continue existing levels of federal highway and public transportation spending through May 2015. If you are concerned about federal highway funding, that's the good news.

The more dire news is that what Congress passed does nothing to stabilize the inherently weak structure of the Federal Highway Trust Fund or to make it solvent beyond 2015. The country's infrastructure needs remains a serious question mark and in poor states like Mississippi, that question is even more ominous.

Kevin Pula, a research analyst at the National Conference of State Legislatures, writes: "It is widely acknowledged that because of more fuel efficient vehicles and changing travel habits the current structure of a fixed gasoline tax is unsustainable as a transportation funding source.

"Some have proposed an indexed gasoline tax. Indiana Representative Ed Soliday (R), however, pointed out that a simple index of the gasoline tax to the consumer price index (CPI) is not a long-term solution because highway maintenance and construction costs are rising at a faster rate than the CPI," Pula concluded.

The Federal Highway Trust Fund is funded from federal taxes on gasoline and motor fuels and is the source of money for federal spending on highways, bridges, roads and transit.

Beyond 2015, the Federal Highway Trust Fund faces the same problems that the Mississippi Department of Transportation faces in raising state highways funds from state fuel taxes. Fuel consumption is flat and fuel efficiency continues to improve, so as we drive less and get more miles to the gallon, the federal gas tax —currently at 18.4 cents per gallon — doesn't raise enough revenue to sustain the current transportation infrastructure or to expand and improve it.

What happens after 2015? The collapsing source of federal funds for Mississippi road and bridge construction and maintenance is only part of the challenge facing Mississippi's 1.9 million licensed drivers.

Mississippi has about 4,700 miles of highways in dire need of repair at an estimated current cost of nearly $1 billion, according to Central District Transportation Commissioner Dick Hall. One of the biggest public policy and economic misconceptions in Mississippi is the notion that as gas prices have skyrocketed, state gas tax revenues have risen along with them. That's not the case.

Mississippi's 18.4 cents per gallon state gas tax (CPG) is a flat tax. When we paid $1 a gallon for gas, the tax was 18.4 CPG. When we pay $3.60 per gallon at the pump, the state tax is still 18.4 CPG. The only way the state takes in more revenue in gas taxes is for the volume of gas consumed to increase.

The state's 18.4 CPG gas tax was last raised in 1987. According to a report by the American Society of Civil Engineers — just like the federal gas tax - Mississippi's flat gas tax isn't keeping pace with the inflation of rising highway construction and maintenance costs and with the modern fuel economy improvements in today's vehicles.

In 2012, a national report found that Mississippi has an estimated $30 billion in highway and bridge needs between 2008 and 2035 but that the state's current gas tax structure would only generate $15.3 billion to meet those expenses in a "best-case" scenario.

While Congress indeed kicked the can down the road on this issue, the road still demands attention in the future.

Sid Salter is a syndicated columnist and director of public affairs at Mississippi State University. Contact him at (601) 507-8004 or sidsalter@sidsalter.com.